Hispanic is actually an incorrect term. It is an adjective, not a noun, and refers to anything from the peninsula of Hispania, which includes Portugal and the Basques and Catalans and Gallegos that don't speak Spanish.

The term came into use in the US census (1920 I think). The US government was wanting to figure out a way to get numbers on Spanish speakers in the US, who of course checked any racial column that fit their particular race.
Someone came up with the term Hispanic and listed it under "race".
So the Hispanics (once they were told what it meant) promptly checked off Hispanic and white, Hispanic and Indian, Hispanic and black. LOL It messed up the census big time.

The problem is we are now stuck with the term, as erroneous as it may be, so we need to at least be aware of the varieties of people it encompasses.

e.e. norcod - Thanks for the very imformative post on the Spanish speakers and descendants of Spaniards who live in the Southwest.